April 4 Daily Market Analysis
Daily market analysis by OptionRally
The pair sold off sharply on Tuesday’s late trades to print fresh weekly lows at 1.3212 after FOMC March policy-setting meeting didn’t show any serious discussions around QE3, which in turn boosted the US dollar sentiments across the board. Earlier, Concerns over Spain’s finances limited upside after 2012 budget showed higher deficit and debt ratio despite spending cuts. Technically, the cross broke below the sideways range support of 1.3250 after gave up 1.3300 key handle which also represents 200 HMA in the recent dealings. The current corrective wave may clear the direction in the upcoming hours as it would favor bearish continuation if respected the 1.3250 as a resistance, preferably the upside to be rejected below 200 4H-MA at 1.3240. Fresh weakness is on the cards if the price extended lower below 1.3200 but better to come coincided with breaching and closing below 1.3190 key low and Fib 50% of 1.3003-1.3485 ascend.
Cable failed to benefit from a better than expected reading of construction PMI in UK and tracked the single currency weakness on Tuesday’s session. The pound accelerated the downside following the hawkish Fed‘s minutes which dampened further stimulus hopes and by extension strengthened the greenback broadly. The short term bias turned significantly to downside and further easing would be anticipated with clearance of the rising trendline connects to March lows 1.5600, which managed to contain the declines so far at 1.5890. Next downside objective as well as support zone is drawn by 20 and 200 Day-MA which currently situated between 1.5820-1.5840 area. Fresh buying interest should be predicted at these levels to maintain the bullish picture in the longer run. However, below the latter could signal further weakness toward 1.5760 which represents the support offered by main ascending trendline coming from yearly lows near 1.5200.
The pair tumbled sharply yesterday as risk sentiments worsened after Fed officials gave upbeat assessment for economic expansion which cut prospects for another round of asset purchases, commonly known as quantitative easing. The previous gains in commodity and equity markets crumbled which worsened sentiments toward riskier currencies including the Aussie on a large scale. The near-term outlook remains aligned towards the downside as Tuesday’s attempt towards reclaiming key barrier 1.0400 zone, failed at 1.0455 and subsequent weakness pushed the price below it once again. Above 1.0300 handle which managed to hold and contain dips so far, the pair may develop further corrective upleg with the 20 HMA currently offers the near resistance around 1.0375. Before which we have a triple-low formation on the hourly chart around 1.0355 and if managed to hold and caps corrective bounce, the awaited bearish extension scenario may be revived on Wednesday’s session and as previously mentioned the 1.0230-1.0250 price zone comes insight next.
The pair spiked higher on Tuesday after rose with more than 90 pips in a matter of minutes in the wake of Federal Reserve’s minutes release which showed a less interest form FOMC members to expand stimulus measures in the near future as the majority suggested a solid economic performance over the past months. The cross has established a consolidation range between 0.900-0.9100 in the past five sessions. However, this did not follow through, and the market continues to trade sideways instead of a bearish continuation as the psych level held despite short-term bulls couldn’t translate this situation into a real rally. Larger picture, however, maintains bearish tone as the main resistance holds around 0.9135 (double high and 50% retracement of 0.8929-0.9332 upswing). Moreover, The 200 4H-MA around 0.9110 adding more support for this resistance after managed to contain the latest bullish action. Breaking above the latter may signal further strengthening towards the important 0.9175-0.9200 price area which breaching above required to catch with the previous bullish path.
Precious metals lost the ground sharply on Tuesday, snapping a two sessions of solid gains with Gold prices moderated to fresh 11-day lows following a less accommodative tone from the Federal Reserve according to the minutes policy meeting of March which released yesterday and showed that only two members opted to suggest further stimulus if the economic conditions deteriorated throughout the year. The minutes triggered strong buying inertest for the greenback against all the major currencies with Euro and Pound almost gave up all of the weekly gains posted earlier. Physical demand returned to play against the bullish trend after Indian jewelers and gold shops denied Monday’s speculations that they will reopen and resume work after decided to remain closed for 18th day in a row. The wide strike is close to ending the third week amid objections to the latest duty and tax hikes which boosted concern over muted purchases in the world’s largest metal consumer. Technically, Breaching below the recent lows near 1640$ mark may accelerate the downward pressure toward testing the March’s bottom around 1625$ level. While a sustained close above 1660$ barrier is extremely needed initially to ease immediate bear pressure and keep the chances of resuming bull swing alive. Stalling above 1640$ may recall bargain hunters to buy weaker prices but regaining the previous upside path can’t be guaranteed.
Gold for June delivery shed $7.70, or 0.5%, to settle at $1,672 an ounce on the Comex division of the New York Mercantile Exchange.
Silver futures for May delivery advanced 17 cents, or 0.5%, to $33.27 an ounce.
Oil prices tumbled strongly yesterday to break briefly below 104$ barrier following Fed‘s minutes releases which dashed hopes over a fresh QE round after the statement devoid of any signals for adding more long-term securities. Crude’s prices came under selling pressures earlier on the session on concerns over Spanish situation with detailed public budget showed a surge in debt-to-GDP ratio which currently close to 80%, also on some downbeat data after US factory orders missed expectations in February. Elsewhere, Investors are anticipating on Wednesday’s American hours the release of weekly U.S. crude inventories for the past week especially after the last data showed a sharp increase with more than 7M barrels which sparked fears over demand strength in the world’s largest oil consumer. Lingering tensions between Iran and the West still in oil traders minds and the market would closely eye a fresh round of talks between the two parties which due to be scheduled after two weeks. Technically, the price after broke initially below 104$ could risk further downside as short term bears will regain control if the price confirmed the breakdown below this important level which could turn into a strong technical resistance.
WTI Crude oil for May delivery dropped $1.22, or 1.2%, to end at $104.01 a barrel on the New York Mercantile Exchange. Brent crude for May settlement fell 58 cents, or 0.5 percent, to $124.85 a barrel on the London-based ICE Futures Europe exchange.
Wall street & Equity Markets Review
U.S. stocks declined on Tuesday’s trades on a reaction for the Fed minutes after eased QE3 hopes which got lifted last month from Bernanke’s speech when the chairman denied an intention for a less accommodative approach after warned of unsustained jobs growth but yesterday’s release confirmed the previous estimates when the market speculated the recent signals about improving US economy as a reason to weaken further stimulus prospects. The Fed‘s officials according to the minutes welcomed a continued modest economic expansion and decent gains in labor market which typically means holding a wait-and-see policy with no necessary for further easing as long as the economy able to pick up enough steam without interventions which often leads to rising inflationary pressures on the long term. The ADP report will be the main focus on Wednesday as often seen an early indication for the formal non-farm payrolls report which is expected on Friday and traditionally takes the all attention.
The Dow Jones industrial average was down 64.94 points, or 0.5%, at 13,199.50.
The S&P 500 index declined 5.88 points, or 0.4%, at 1,413.16.
The NASDAQ composite Index retreated 6.13 points, or 0.2%, at 3,113.57.